If you’ve ever been involved in any type of negotiation, you would know that emotion is something that can quickly cloud your judgement.
It’s long been accepted that when buying property, you need to avoid emotion and stick to the numbers. This is certainly true when it comes to buying an investment property.
But is there actually a time when emotion is important and something that needs to be embraced?
Owner-Occupiers Buy with Emotion
One of the fundamentals of buying property in Australia is that ultimately, demand is driven by owner-occupiers. While investors might look to buy without emotion, it’s important to recognise that most owner-occupiers don’t.
Owner-occupiers are buying something that is far more than just an asset. It’s a place to live and a place for their family to grow up in. There is a tremendous amount of pride and emotional attachment that is connected to the family home, not to mention other factors such as social status.
As an investor, we need to understand that these factors are at play and for that reason, we need to be buying an investment property with an owner-occupier in mind. Owner-occupiers are the ones that will bid against one another to secure a great property and that’s how you get top dollar when the time comes to sell.
To do this effectively, it’s vital that you are looking to purchase an investment property in an area that is heavily focused towards owner-occupiers. This is likely to be an area that has good amenity close by or things like access to beaches and of course, good schools nearby.
These owner-occupier areas are generally locations that see consistent demand and have limited supply. Meaning that over a long period of time, prices will continue to rise as will the value of your investment.
The second element, that deals specifically with emotion, is to make sure your investment property has a high degree of owner-occupier appeal.
Consider what a young professional couple might be looking for if they are buying an apartment in a high-demand beachside suburb? They might want a light-filled living area that that can use to entertain.
Similarly, a family will want a property that has plenty of space, with a yard that their children can play in. Bedrooms that are big enough. Great storage. As well as light-filled family rooms.
You need to buy an investment property that you love and that an owner-occupier would love as well. Using your own emotions to gauge just how great your potential investment really is, can tell you a lot about a potential property.
Time Pressure Causes Negative Emotions
The other part of the emotional equation is the pressure that comes when looking for an investment property. We all know that finding great properties take time. Buying property means talking to agents and attending home opens regularly.
Homebuyers can quickly get frustrated when they can’t find a property or especially when there is a lot of competition. This is common in quality beachside locations in Sydney.
It’s unrealistic to think that you will be able to find a great property in a matter of days. Allow yourself the time and understand that it might take many months. If you need to hire a professional to help the process – do it.
Strike a balance between emotion and logic. Find something that you’ll like, but understand that it takes time.
By understanding how emotion fits into the homebuying process, you can use it to your advantage and find a great property with plenty of owner-occupier appeal in a realistic timeline.